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Patented Time-Release Delivery System for Beverage
Investor Presentation on CircleUp: 2-17-14
For more information about Züm XR’s current 506c funding go to:
www.CircleUp.com
This Confidential Investor Presentation has been prepared for discussion purposes only. It is being delivered on a confidential basis to specified parties solely to assist them in deciding whether to proceed with their investigation of Züm XR LLC (“Züm XR” or the “Company”) in accordance with procedures established by the Company. This Investor Presentation does not purport to contain all of the information that may be required or relevant to a recipient’s evaluation of any transaction and recipients will be responsible for conducting their own investigations and analysis. The distribution and use by each recipient of the information contained herein and any other information provided may not be distributed, reproduced or used without the express consent of the Company or for any purpose other than the evaluation of the transaction by the person reviewing this Investor Presentation. Neither the Company or any of its affiliates or representatives makes any representation, warranty or guaranty of any kind, express or implied, as to the accuracy, completeness or reasonableness of the information contained herein or any other written or oral communication transmitted or made available to the recipient. The Company and its affiliates and representatives expressly disclaim any and all liability based on or arising from, in whole or in part, such information, errors therein or omissions therefrom. In addition, this Investor Presentation includes certain projections and forward-looking statements provided by the Company with respect to the anticipated future performance of the Company. Such projections and forward-looking statements reflect various assumptions of management concerning the future performance of the Company, and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company. Accordingly, there can be no assurance that such projections or forward-looking statements will be realized. Actual results may vary from anticipated results and such variations may be material. No representations or warranties are made as to the accuracy or reasonableness of such assumptions or the projections or forward-looking statements based thereon. Only those representations and warranties that are made in a definitive written agreement relating to a transaction, when and if executed, and subject to any limitations and restrictions as may be specified in such definitive agreement, shall have any legal effect. Each recipient should make an independent assessment of the merits of pursuing a transaction and should consult its own professional advisors. This Investor Presentation should not be considered to be an offer to buy the securities of the Company described herein. Any such offer, if and when made, will be in writing. The delivery of this Investor Presentation should not create any implication that there has been no change in the business and affairs of the Company since such date. Neither the Company nor its affiliates or representatives undertakes any obligation to update any of the information contained herein. The Company is free to conduct the process for the transaction as it determines in its sole discretion (including without limitation, ceasing to proceed with any transaction, terminating further participation in the process by any party, negotiating with prospective buyers and entering into an agreement with respect to a transaction without prior notice to you or any other person) and any procedures relating to such transaction may be changed at any time without prior notice to you or any other person.
Disclaimer
Legal -Holland and Hart -Perkins Coie
VE
Defensible Intellectual Property
US Patent No. 8,449,920
US Patent No. 8,518,448
US Patent No. 8,545,892
Patent Overview Sustained-released micro-beads delivering active ingredients over an extended period of time in a beverage. Binding agents are used to form the structural framework of beads and retain the active ingredients without chemical bonding. Components of the dispersion medium are GRAS (Generally Regarded as Safe) designated, making suitable for use in food or beverage.
Secure IP
Time-release delivery system for beverage
What is Time-Release?A
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In
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die
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Re
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Extended-Release
Time-release delivery systems supplies active ingredients over a period of several hours, as opposed to all at once. Time-release delivery is time-tested and widely used in pharmaceutical applications. Züm XR is first to bring this technology to the beverage world.
Hours1 2 3 4 5
Test Delivery SystemSource. Laboratory Nano Pharmaceutical Labs 2013
Why Time-Release is Better?
1-2. Proprietary research Nano Pharmaceutical Labs 2013
Solution: 1. Time-release delivers a smooth, even flow of caffeine and mitigates the caffeine crash1 2. Time-release delivery increases nutrient absorption by up to 60%2
Problem: 1. All energy drinks deliver an immediate hit of caffeine followed by an unpleasant “crash”2. Many nutrients are not absorbed by the body due to bioavailability issues
Why Time-Release is Better?
-75% of energy drink consumers note the “crash” as the #1 dissatisfier1
-Consumers of energy drinks get a large immediate hit of caffeine, followed by an abrupt “crash”
-25% of proteins in protein drinks are not absorbed by the body
1. Proprietary research PepsiCo 2010 2. DataMonitor 2013 3 Mintel 2013
Solution:Problem:
-Our time-release delivery system removes the crash and delivers smooth, sustained, focused energy for up to 5 hours
-Our time-release delivery system can increase protein absorption by up to 55%
Energy Drink Market Size: $13.2 Bil2
Protein Drink Market Size: $255 Mil3
Licensing our delivery system will create an immediate point-of-difference and defensible
competitive advantage for many large beverage brands
Why Time-Release is Better?
-90% of certain vitamins are voided out by the body
-Vitamins A, B, and C lose their potency sitting in water
4-5 Mintel 2013
-75% of electrolytes are depleted in 65 minutes of rigorous exercise
-Our time-release delivery system maintains optimal electrolyte levels for up to five hours
-Our time-release delivery system increases absorption of C and B vitamins by over 60%
-By storing vitamins in our time-release micro beads, nutrients stay powerful and readily absorbed by the body
Solution:Problem:
Vitamin water Market Size: $2.3 Bil4
Sports Drink Market Size: $6.3 Bil5
Licensing our delivery system will create an immediate point-of-difference and defensible
competitive advantage for many large beverage brands
1. Develop & test time-release delivery system - Complete
2. Secure Patents for delivery system - Complete
3. Create proof of concept via energy drink - Complete
4. License / sell delivery system to large CPG company - Began Jan 2014
1 2 3 4
A Well Thought Out Roadmap
Enables
Two Symbiotic Revenue Streams
Time-Release Healthy Energy Powered by Green Tea Extracts
Proving the Concept of Time-Release
DELICIOUS
Innovative time-release energy drink. Züm XR: time-release caffeine, electrolytes, and
vitamins - No crash, more energy, more focus.
Energy Drink B
15 30 45 60 75 90 105 120
Züm XR
3
75% of consumers note the “crash” as the #1 dissatisfier1.
1. Proprietary research PepsiCo 2010 Proof of Concept
Bringing Disruptive Technology to Beverage
Functional drink market had revenues of $25.2 Bil in 2012
DataMonitor 2013
Energy drink sales grew $2.2 Bil from 2009 to 2012
2009 2010 2011 2012
2009 2010 2011 2012
(%)
Proof of Concept
Entering Large, High Growth Market
Outstanding Consumer Acceptance
#2 selling energy drink in Rocky Mountain, large natural food chain store
White space consumer:health oriented, athletic working adult
Proof of Concept
Large Scale Production Facility: February 2014
Distribution: March 2014
Capital for Successful Growth: January 2014
Highly Scalable Business
Retail Expansion: March 2014
Current distributor:
30 stores 50 stores 55 stores 160 stores 500 stores
Proof of Concept
PROJECTED REVENUE
License Delivery System
US Market Size: $13.2 B1 $6.3 B2 $3.7 B3 $ 2.3 B7 $766 M8 $421 M5 $255 M4 $241 M6
US Market for Licensing Delivery System
$ 27. 2+ Billion
1 DataMonitor 2013 2-4. Mintel 2013 5. IRI FDM 2012 6. IRI FDM 2013 7. IRI FDM 2011 8. Bev Industry 2013
Our patented delivery system has useful applications in many beverage segments
Huge Market for Licensing Delivery System
PROJECTED REVENUE
Boost® type diabetic products that contain extended-release nutrients.
Ensure® type geriatric shake with time-release vitamins, minerals, and amino acids for all day balanced nutrition.
EmergenC® type ready to mix powder that delivers a sustained-release supply of caffeine, vitamins, and electrolytes for busy adults.
Monster Energy® type healthy energy beverage that delivers a time-release supply of caffeine, vitamins, and electrolytes.
Tropicana® Morning Rush beverage delivering a steady ingestion of caffeine and Vitamin C.
PowerAde® type healthy performance sports drink, that delivers an extended-release of electrolytes and vitamins.
Potential Licensees of Delivery System
License Delivery System
Strong Projected Revenue Growth
NEW STORESWFM: RMNEW STORESWFM: RM
NEW STORESWFMSproutsVitamin ShoppeKings: COSafeway: COCO DSD
NEW STORESWFMSproutsVitamin ShoppeKings: COSafeway: COCO DSD
NEW STORESWFM: SW, SoPac, NorCal, NEast, MidAtlanticRaley’sAZ DSD
NEW STORESWFM: SW, SoPac, NorCal, NEast, MidAtlanticRaley’sAZ DSD
NEW STORESWFM: PacNW, FL, Midwest, South, , NorAtlanticSafeway CALA DSD
NEW STORESWFM: PacNW, FL, Midwest, South, , NorAtlanticSafeway CALA DSD
NEW STORESKroger CANYC DSDVons
NEW STORESKroger CANYC DSDVons
Licensing gross margin = 75+%
Beverage gross margin = 57%
Licensing gross margin = 75+%
Beverage gross margin = 57%
Revenue from LicensingRevenue from Beverage
$1.26 Mil
$4.25 Mil
$6.80 Mil
$10.57 Mil
$.20 Mil
ROBERT NIICHEL-FOUNDER M.S. BIOCHEMISTRYB.S. FINANCE & ECONOMICS• 20 YEARS EXPERIENCE IN FINANCE AND PHARMA R&D• MULTIPLE SUCCESFUL VENTURES IN PHARMA AND FINANCE
MICHAEL MCCARTHY-MARKETING MBA• 20 YEARS CORPORATE AND START
UP EXPERIENCE WITH NATURAL FOOD / BEVERAGE BRANDS
BRETT WAXLER- SALESB.S. FINANCE• 8 YEARS EXPERIENCE WITH EXTENSIVE NATIONAL ACCOUNT SALES• POSITIONS AT SMITH BARNEY AND PART OF TECH IPO LISTED ON THE NYSE
JAMES TONKIN-BOARD STRATEGIC ADVISOR• 35 YEARS BEVERAGE EXPERIENCE • EXECUTIVE LEVEL CONSULTANT TO MULTIPLE SUCCESSFUL BEVERAGE BRANDS
WALLY SIMON-BUSINESS DEVELOPMENT• 25 YEARS BEVERAGE EXPERIENCE • STRATEGIC DEVELOPMENT POSITIONS AT MAJOR FLAVOR COMPANIES FIRMENICH AND DANISCO
Accomplished Management Team
MARK MAGGIO-STRATEGIC ADVISOR• 25 YEARS NATURAL BEVERAGE AND FOOD EXPERIENCE • STRATEGIC SALES AT EXEC LEVEL• SUCCESSFUL START-UP AND EXIT EXPERIENCE
Funding Target: $1.0 MM Structure: Convertible Debt: 20% discount, 8% interest rate, 24 month maturity date, $8 million market valuation cap
25% Working Capital 30% G&A 27% Sales and Marketing 18% Facilities and Equipment$220,000 of raise to be used for licensing and
additional scientific studies on time-release applications.
Source of Funds
Use of Funds
10
Funds Used to Date
$750,000
Transaction Summary
The Future of Beverage is Züm XR
Revolutionary time-release technology
Outstanding consumer acceptance
Rare beverage intellectual property
Large potential global market: $500 billion
Potential exit opportunities
For additional information go to: www.circleup.com
Patented Time-Release Delivery System
